I have been involved in the financial world for over 25 years with experience as an advisor, teacher, and writer. I am a full believer in the free-market system and that financial markets are efficient with most stocks reflecting their real current value. The best opportunities for profits on individual stocks come from stocks that are less-widely followed by the average investor or from stocks that may not accurately reflect the opportunities that currently exist in their markets.Analyst’s Disclosure: I/we ...

Financial Performance - Net income for 2025 was $43.953 million, an increase from $29.709 million in 2024, representing a growth of 48%[169] - Diluted earnings per share (EPS) rose to $2.65 in 2025, up from $1.77 in 2024, marking a 49.2% increase[169] - Return on average assets (ROA) for 2025 was 1.00%, up from 0.70% in 2024[169] - Return on average equity (ROE) increased to 10.66% in 2025, compared to 7.72% in 2024[169] - Total stockholders' equity was $431.9 million at December 31, 2025, reflecting a $31.0 million increase, or 7.7%, from the previous year[267] - Arrow's net income for the year was $44.0 million, contributing to the increase in stockholders' equity[267] Interest Income and Expenses - Net interest income for 2025 was $133.164 million, an increase of $21.432 million, or 19.2%, compared to the previous year[170] - Interest and fees on loans increased to $184.1 million for 2025, a rise of 7.4% from $171.3 million in 2024[170] - Interest expense decreased to $76.983 million in 2025, down by $6.3 million, or 7.5%, from $83.261 million in 2024[170] - Net interest margin improved to 3.17% for 2025, compared to 2.72% in 2024, reflecting yield expansion on earning assets[171] - The company reported a net interest spread of 2.61% in 2025, compared to 2.09% in 2024, reflecting improved profitability on interest-earning assets[195] Asset and Loan Growth - Average assets grew to $4,389,573 thousand in 2025, up from $4,266,721 thousand in 2024[1] - Total assets reached $4.4 billion at the end of 2025, an increase of $139.5 million, or 3.2%, compared to 2024, mainly due to loan growth[175] - Total loan balances were $3.5 billion, with a loan growth of $59 million, or 1.7%, for the year[177] - Total loans outstanding increased to $3,453.1 million in 2025, up from $3,394.5 million in 2024, representing a growth of approximately 1.7%[223] Non-Interest Income and Expenses - Non-interest income rose to $32.4 million in 2025, a 15.5% increase from $28.1 million in 2024, primarily due to growth in wealth management, insurance, and interchange fees[173] - Non-interest expense increased by $5.7 million, or 5.8%, to $102.9 million in 2025, with salaries and benefits accounting for $56.3 million, reflecting a 6.8% rise from the previous year[174] - Total non-interest income for 2025 was $32.4 million, an increase of $4.4 million, or 15.5%, from $28.1 million in 2024[200] Credit Losses and Asset Quality - The provision for credit losses related to the loan portfolio increased to $7.3 million in 2025 from $5.2 million in 2024, driven by a $3.75 million charge-off in Q2 2025[172] - Nonperforming loans decreased to $8.5 million, a 59.8% reduction from the previous year, with the ratio of nonperforming loans to total loans at 0.24%[184] - The allowance for credit losses was $34.3 million at year-end 2025, representing 0.99% of total loans, unchanged from the previous year[185] Deposits and Funding - Total deposit balances increased to $3.9 billion, up $111.5 million, or 2.9%, from the prior year, with non-interest bearing deposits rising by $19.4 million, or 2.8%[178] - Average total deposit balances increased by $174.8 million, or 4.7%, in 2025, primarily due to additional brokered CDs and migration to higher-cost products[251] - Total deposits reached $3.898 billion at December 31, 2025, with an average rate of 1.95%[251] Securities and Investments - The fair value of the investment portfolio increased to $495.9 million in 2025, up by $32.8 million from $463.1 million in 2024[211] - The total carrying value of securities held-to-maturity decreased to $66.975 million in 2025 from $98.261 million in 2024, a decline of approximately 31.7%[219] - Gross unrealized losses on available-for-sale securities were $17.0 million as of December 31, 2025, primarily due to interest rate changes[217] Efficiency and Taxation - The efficiency ratio improved to 61.97% in 2025 from 67.68% in 2024, indicating enhanced operating efficiency[205] - Provision for income taxes increased to $11.4 million in 2025, up by $3.8 million, or 49.5%, from $7.6 million in 2024[209] - The effective tax rate for 2025 was 20.6%, slightly up from 20.5% in 2024, primarily due to higher pre-tax income[209] Liquidity and Capital - Arrow's primary liquidity ratio was 10.7% of total assets at December 31, 2025, exceeding the internal policy limit of 5%[262] - Arrow's Tier 1 Risk-Based Capital Ratio was 13.6% as of December 31, 2025, well above the minimum required level of 6.0%[266] - The company did not experience any liquidity constraints in 2025 and maintained a stable core deposit base[263] Stock Repurchase and Commitments - Arrow repurchased approximately $9.9 million of its common stock in 2025, totaling around 377 thousand shares[273] - Commitments to extend credit amounted to $462.9 million at December 31, 2025, compared to $449.5 million in 2024, indicating a growth of 3.1%[277] Risk Management and Scenarios - Arrow's Pre-Shock Scenario EVE increased from $592.9 million at December 31, 2024, to $685.0 million at December 31, 2025, driven by core deposit growth and an increase in the value of loan and investment portfolios[288] - In the +100 Basis Point Rate Shock Scenario, Arrow's EVE rose from $566.8 million at December 31, 2024, to $693.6 million at December 31, 2025, reflecting a change of 1.3%[289] - Arrow's income simulation model indicates a calculated change in net interest income of 3.2% in Year 1 and 5.2% in Year 2 under a -200 basis point interest rate scenario[292]

4Q 2025 Investor Presentation January 29, 2026 Safe Harbor The information contained in this investor presentation may contain statements that are not historical in nature but rather are based on management's beliefs, assumptions, expectations, estimates and projections about the future. These statements can sometimes be identified by Arrow's use of forward-looking words such as "may," "will," "anticipate," "estimate," "expect," or "intend." These statements may be "forward- looking statements" within the m ...

Financial Performance - Arrow reported a record net income of $14.0 million or $0.85 per share for Q4 2025, compared to $4.5 million and $0.27 per share in Q4 2024, representing a 211% increase in net income year-over-year [2]. - For the full year 2025, net income totaled $44.0 million, with EPS of $2.65, up from $29.7 million and EPS of $1.77 in 2024, marking a 48% increase in net income [9]. - Net income for Q4 2025 was $14,013,000, representing a significant increase of 213.5% from $4,472,000 in Q4 2024 [17]. - Basic earnings per share for the twelve months ended December 31, 2025, were $2.65, up 49.2% from $1.77 in 2024 [17]. - Net income for the quarter ended December 31, 2025, was $14,013,000, an increase of 9.2% from $12,825,000 in the previous quarter [21]. Asset and Equity Growth - Total assets were $4.4 billion at December 31, 2025, a 3.2% increase from the prior year [11]. - Total assets as of December 31, 2025, were $4,445,862,000, an increase of 3.2% from $4,306,348,000 in 2024 [19]. - Total stockholders' equity increased to $431,852,000 as of December 31, 2025, from $400,901,000 in 2024, reflecting an increase of 7.7% [19]. - Total stockholders' equity increased to $431,852,000 from $417,687,000 in the previous quarter, showing a growth of 3.0% [24]. - Stockholders' equity grew to $425,042 thousand as of December 31, 2025, up from $393,696 thousand in the previous year, reflecting a growth of 7.93% [28]. Interest Income and Margins - The net interest margin reached a record 3.24% in Q4 2025, compared to 3.22% in Q3 2025, and 3.17% for the full year, up from 2.72% in 2024 [6][9]. - Net interest income for Q4 2025 was $35.1 million, a 2.9% increase from Q3 2025, and $133.2 million for the full year, a 19.2% increase from 2024 [9]. - Total interest and dividend income for Q4 2025 was $54,610,000, an increase of 7.8% from $50,901,000 in Q4 2024 [17]. - Net interest income after provision for credit losses for the twelve months ended December 31, 2025, was $125,890,000, up 18.2% from $106,552,000 in 2024 [17]. - Net interest income for the quarter was $35,143,000, an increase from $34,131,000 in the previous quarter, reflecting a growth of 2.96% [25]. Credit Losses and Loan Performance - The provision for credit losses for 2025 was $7.3 million, up from $5.2 million in 2024, primarily due to loan growth [12]. - The company reported a provision for credit losses of $7,274,000 for the twelve months ended December 31, 2025, compared to $5,180,000 in 2024 [17]. - Nonperforming assets decreased to $8,735 million in Q4 2025, down from $21,477 million in Q4 2024, a reduction of 59.3% [35]. - The provision for credit losses for Q4 2025 was $846 million, significantly lower than $2,854 million in Q4 2024, a decrease of 70.3% [35]. - Total loans increased to $3,453,093 million in Q4 2025, up from $3,394,541 million in Q4 2024, representing a growth of 1.73% [35]. Deposits and Liabilities - Total deposits increased by $111.5 million, or 2.9%, from the prior year, reaching $3.9 billion [14]. - Total liabilities increased to $4,014,010,000 as of December 31, 2025, compared to $3,905,447,000 in 2024, reflecting a growth of 2.8% [19]. - The company reported a total liabilities figure of $4,074,153 thousand, up from $3,946,137 thousand in the previous year, indicating a growth of 3.24% [28]. Efficiency and Management - Return on average assets was 1.24% for Q4 2025, up from 1.00% for the full year 2024 [6][9]. - Return on average equity (ROAE) increased to 13.08% from 12.32% in the prior quarter, demonstrating stronger profitability [21]. - Efficiency ratio improved to 58.94% from 59.56% in the previous quarter, indicating better cost management [21]. - The allowance for credit losses was $34,322,000 as of December 31, 2025, compared to $33,598,000 in 2024, indicating a slight increase [19].

Core Insights - Arrow Financial (AROW) is a financial institution with a market capitalization of approximately $544.4 million as of August 2025 [1] Company Analysis - The company is being reevaluated for its investment potential, indicating a focus on its financial health and market position [1] - The analysis is part of a broader investment strategy that seeks to identify companies trading at significant discounts to their intrinsic value [1] Investment Philosophy - The investment approach combines Benjamin Graham's principles with a contrarian market perspective, emphasizing cash flow analysis and value assessment [1]

Financial Performance - Net income for the third quarter of 2025 was $12.825 million, a significant increase of 18.68% compared to $10.805 million in the previous quarter[182]. - Net income for Q3 2025 was $12.8 million, up from $10.8 million in Q2 2025, driven by a $1.6 million increase in net interest income and a $1.1 million increase in non-interest income[188]. - Net income for the three months ended September 30, 2025, was $12,825 thousand, a 42.9% increase from $8,975 thousand in the same period of 2024[270]. - For the nine months ended September 30, 2025, net income was $29,940 thousand, an 18.6% increase from $25,239 thousand in the same period of 2024[278]. Earnings and Income Metrics - Diluted earnings per share rose to $0.77, up 45.3% from $0.53 year-over-year[270]. - Year-to-date Net Interest Income for the period ended September 30, 2025, was $98,021,000, compared to $82,045,000 for the same period in 2024[211]. - Net interest income for the quarter ended September 30, 2025, was $34,131,000, an increase from $32,533,000 in the previous quarter[209]. - Total non-interest income for the third quarter of 2025 was $8,716 thousand, reflecting a 7.2% increase from $8,133 thousand in the prior year[273]. Asset and Equity Growth - Total stockholders' equity increased to $417.687 million as of September 30, 2025, up from $408.506 million at June 30, 2025, representing a growth of 0.29%[182]. - Stockholders' equity increased to $417.7 million at September 30, 2025, a 4.2% rise from $400.9 million at December 31, 2024[199]. - Total assets reached $4.6 billion as of September 30, 2025, reflecting a $172.4 million increase, or 3.9%, from June 30, 2025[194]. - As of September 30, 2025, total assets increased to $4.59 billion, up by $280.8 million or 6.5% from December 31, 2024[213]. Loan and Deposit Information - Total loans were $3.4 billion as of September 30, 2025, with loan growth of $17.3 million primarily in residential real estate loans[196]. - Total deposits rose to $4.10 billion, an increase of $272.1 million or 7.1% from December 31, 2024, driven by a $125 million addition of brokered CDs[214]. - Noninterest-bearing deposits accounted for 18.8% of total deposits as of September 30, 2025, compared to 18.4% at the end of 2024[214]. - The total loans as of September 30, 2025, reached $3,424,784,000, an increase from $3,394,541,000 as of December 31, 2024[228]. Interest Income and Margins - Net interest income on a GAAP basis was $34.131 million for Q3 2025, an increase of 4.91% from $32.533 million in Q2 2025[183]. - The net interest margin improved to 3.24% for Q3 2025, compared to 3.16% in Q2 2025, indicating a positive trend in interest income generation[183]. - The Net Interest Margin improved to 3.22% for the quarter ended September 30, 2025, up from 3.15% in the previous quarter[209]. - The annualized yield on total loans improved to 5.43% for the quarter ended September 30, 2025, compared to 5.30% for the quarter ended December 31, 2024[230]. Risk Management and Credit Quality - The allowance for credit losses was $34.2 million, representing 0.99% of loans outstanding, stable compared to previous periods[204]. - Nonperforming loans decreased to $6.3 million, or 0.18% of period-end loans, down from 0.62% at December 31, 2024[205]. - The provision for credit losses for Q3 2025 was $0.8 million, up from $0.6 million in Q2 2025, influenced by charge-offs and loan balance growth[243]. - Nonperforming assets decreased to $6.7 million as of September 30, 2025, down from $21.5 million at December 31, 2024, and $22.3 million at September 30, 2024[245]. Operational Efficiency - The efficiency ratio improved to 59.56% from 65.59%, indicating better cost management[276]. - The efficiency ratio improved to 63.06% in 2025 from 67.10% in 2024, reflecting a decrease of 4.04% or 6.0%[283]. - The average balance of loans was $3,424,784 thousand with an interest rate of 5.43% for the quarter ended September 30, 2025, compared to $3,329,873 thousand at 5.27% in the same quarter of 2024[210]. Regulatory Capital and Compliance - Arrow Bank's Common Equity Tier 1 (CET1) capital ratio was 13.07% as of September 30, 2025, significantly above the minimum requirement of 4.5%[253]. - Arrow Bank qualified as "well-capitalized" under the federal banking regulatory standards as of September 30, 2025[253]. - Arrow issued $20 million of Junior Subordinated Obligations, which will continue to qualify as Tier 1 regulatory capital until maturity or redemption[241].

Financial Performance - Net income for the third quarter of 2025 was $12.8 million, or $0.77 per share, an increase from $10.8 million and $0.65 per share in the previous quarter[2] - Net income for the three months ended September 30, 2025, was $12,825,000, a 43.5% increase from $8,975,000 in the same period of 2024[18] - Basic earnings per share for the three months ended September 30, 2025, were $0.77, up from $0.54 in 2024, indicating a growth of 42.6%[18] - Net income for the quarter ended September 30, 2025, was $12,825 million, a 18.7% increase from $10,805 million in the previous quarter[21] - Basic earnings per share increased to $0.77, up from $0.65 in the prior quarter, reflecting a 18.5% growth[21] Interest Income and Margin - Record net interest income reached $34.1 million, up 4.9% from $32.5 million in the second quarter of 2025[10] - Net interest income for the quarter was $34,131 million, up from $32,533 million in the previous quarter, indicating a 4.9% increase[26] - Total interest and dividend income for the three months ended September 30, 2025, was $53,598,000, an increase of 8.7% from $49,443,000 in the same period of 2024[18] - Net interest income after provision for credit losses for the nine months ended September 30, 2025, was $91,593,000, up 15% from $79,719,000 in 2024[18] - Net Interest Margin improved to 3.22% from 2.78% in the same quarter last year, indicating enhanced profitability on earning assets[30] Asset Growth - Total assets grew by $172.4 million, or 3.9%, to $4.6 billion as of September 30, 2025[12] - Total assets as of September 30, 2025, reached $4,587,115,000, an increase from $4,306,348,000 at December 31, 2024[19] - Total assets increased to $4,399,815 thousand from $4,245,597 thousand year-over-year, showing a growth of 3.63%[30] Loans and Credit Quality - Total loans amounted to $3.4 billion, with a loan growth of $17.3 million driven by residential and commercial loans[12] - Total loans increased to $3,442,009 million in Q3 2025, up from $3,394,541 million in Q4 2024, representing a growth of 1.4%[37] - Net loans charged-off for the quarter were $830 million, compared to $518 million in the previous quarter, indicating an increase of 60.2%[37] - Nonperforming loans to period-end loans ratio improved to 0.18% in Q3 2025 from 0.62% in Q4 2024, showing a significant improvement in asset quality[37] - The allowance for credit losses was $34.2 million, representing 0.99% of loans outstanding, a slight decrease from 1.00% in the prior quarter[12] Dividends and Shareholder Returns - The company declared a quarterly cash dividend of $0.29 per share, payable on November 24, 2025[2] - Tangible book value per share increased by 2.7% to $23.85 from the prior quarter[10] - Total stockholders' equity increased to $417,687 million from $408,506 million in the previous quarter, a growth of 0.3%[25] Efficiency and Ratios - Return on average assets (ROA) increased to 1.16%, up from 1.00% in the previous quarter[7] - Return on average equity, annualized, rose to 12.32%, compared to 10.66% in the previous quarter[21] - The efficiency ratio improved to 59.56%, down from 63.41% in the previous quarter, indicating better expense control[21] - Common Equity Tier 1 Ratio improved to 13.07% from 12.73% in the previous quarter, indicating a stronger capital position[28]

Financial Performance - 3Q25 net income reached $12.8 million, resulting in an EPS of $0.77, marking an over 18% increase compared to 2Q25[13] - Year-to-date net income stands at $29.9 million, with an EPS of $1.80[13] - The FTE net interest margin (NIM) improved to 3.24% in 3Q25, compared to 3.16% in 2Q25[13] - Return on average assets (ROA) was 1.16% for 3Q25[13] - Tangible book value (TBV) per share increased by 2.7% from the previous quarter to $23.85[13] - The efficiency ratio improved to 59.6%[13] Balance Sheet and Capital Actions - Loan growth was 2% on an annualized basis[13] - Approximately $2 billion of deposits are subject to repricing with rate cuts[13] - The company repurchased $1.4 million worth of shares, totaling approximately 53,000 shares at an average cost of $26.87 per share[13] Credit Quality - Net charge-offs were 0.10% for 3Q25[13]

Core Insights - Arrow Financial Corporation's shares have rebounded over 15% since April 2025, following concerns related to tariffs and its loan portfolio [2] Company Overview - Arrow Financial Corporation is a bank holding company based in Upstate New York, with a loan portfolio that has a 17.8% exposure to commercial loans [2] Investment Strategy - The Insiders Forum focuses on small and mid-cap stocks that insiders are purchasing, aiming to outperform the Russell 2000 benchmark over time [2]

Group 1 - The article discusses the recent performance of Arrow Financial Corporation, noting a rebound of over 15% since April 2025 due to concerns regarding tariffs and the bank's loan portfolio [2] - Arrow Financial Corporation has a loan book with 17.8% exposure to commercial loans, indicating potential risk factors in its lending practices [2] - The Insiders Forum, which focuses on small and mid-cap stocks, has a model portfolio that has significantly outperformed the Russell 2000 benchmark since its launch [2] Group 2 - The Insiders Forum portfolio consists of 12-25 top stocks across various sectors that are attractively valued and have seen significant insider purchases [2] - The goal of the Insiders Forum is to consistently outperform the Russell 2000 benchmark over time [2]